PG&E to trim rates slightly as of Jan. 1

Small price break for customers comes as natural gas prices tumble

Pacific Gas and Electric Co. will cut its electricity rates by an average of 0.6 percent on the first day of the new year, the utility reported Tuesday.

Some categories of customers will see a larger decrease than others, but all the changes will be small.

For example, an average household will see its monthly bill dip from $73.40 to $73.32. Larger homes will see bills fall from $158.11 per month to $157.99.

A typical small business will save about $1.16 per month, with its bill dropping to $290.22, according to PG&E.

Most California power plants run on natural gas, which costs far less than it did this summer. So the price of electricity from those plants costs less.

Just as they did with oil, big investors jumped into the market for natural gas this spring and summer, buying it strictly as a financial investment. Prices peaked in early July and then started falling as the recession cut demand for all kinds of fuel.

High natural gas prices during the first half of the year forced PG&E to spend more than planned to buy electricity. So in July, the utility warned that it would raise electricity rates in October and might need another increase in January. Rates did increase in October - by an average of 6 percent - but PG&E called off its planned January increase as gas prices kept tumbling.

Still, consumer advocates wonder why the cut isn't larger. Wholesale natural gas prices have plunged 57 percent from their summer high, and that should lead to a bigger rate decrease, said Mark Toney, executive director of The Utility Reform Network.

He noted that the recession is making it harder for people to pay their bills. According to PG&E, the number of customers shut off due to their failure to pay increased 17 percent during the year's first 11 months, compared with the same period of 2007.

"The thing that concerns us the most is that we're in a terrible economic crisis," Tomey said.

PG&E spokeswoman Emily Christensen said the utility is still trying to recoup money it spent buying expensive power during the first half of 2008, when natural gas prices were soaring. The California Public Utilities Commission gave the company 15 months to recover the money through customers' bills, she said.

"That was over $600 million in increased energy costs that we're still recovering from," Christensen said.

Lower natural gas prices also will help Californians with their heating bills.

PG&E projects that the heating bill for an average home will be $94.60 in January, down from $101.44 a year earlier. Most Californians heat their homes with natural gas, and heating bills typically peak in January.

PG&E offers rebates if customers can cut the amount of natural gas they use in January and February, compared with the same months a year earlier. For every percent cut in gas usage, customers receive an equal percent credit on their bill. Those who save 10 percent or more get a 20 percent credit.